Posts Categorized: News

Important change to claiming home office expenses

Do you want to claim the home office expenses you are entitled to claim for 2022/23?  Then read on as the ATO has made an important to change claiming home office expenses.

Furthermore, they apply from 1st March.

We have been able to claim under one of two methods:-

  • A percentage of all costs based off the work area or
  • A set rate per hour

The set rate per hour had been 52 cents per hour but an alternative rate of 80 cents per hour was offered from March 2020 to June 2022 to accommodate all of those working from home for the first time and who were not used to keeping records.  The 80 cph rate was an all in rate.  Only the 52cph rate allowed one to claim phone, internet and assets (whether claimed in full or depreciated).  As I said, that 80cph rate is no longer available.

Please note that this post is not addressing claims where a business is run from home (with important capital gains tax implications).  That will be covered in a future post.

A new rate is available from 1st July 2022 but please note:-

  1. The rate has increased from 52 to 67 cents.
  2. What the rate covers has changed.
  3. There have been important changes to the records required.
  4. But there is good news. The requirement to have an area set aside to undertake work activities has been removed.

What does the rate cover?

  • Electricity and gas
  • Home and mobile phone usage
  • Internet connection usage
  • Printing and stationery

The change is that other than electricity and gas, these costs could be claimed separately.

Depreciation is to be claimed separately

What records you now need to keep

  • Receipts – but just one quarterly electricity or gas bill (I don’t know about you but I receive these bills monthly).
  • A record of actual hours worked – no estimates. So you will need to keep timesheets, rosters, diaries and other such documents.
  • You will need to keep these records for up to 5 years – even though most taxpayers are required to keep for less.
  • Please note that for assets that are depreciated, one must keep the asset purchase receipt for 5 years from after the last depreciation claim. That could be 10 or 15 years after the date of purchase.  We suggest moving a copy of the receipt into next year’s tax records when starting your record keeping for a new financial year.

A partial year concession

These new rules announced last week apply from 1st July 2022.

As a concession to those who haven’t kept a record of actual hours worked since 30th June 2022 to 28th February 2023, a reasonable estimate, or in the ATO’s words, a representative record, will suffice.

To be able to claim, you must keep an actual record of hours worked from 1st March 2023.

How to keep records

This is an important change which you need to adhere to claim home office expenses from 1st March 2023.

We welcome any questions you may have.

 

Upcoming interest rate rises

It seems all the pundits are now predicting not only a rate rise next Tuesday of 0.25% but another 3 such rises during the year.  For many newish homeowners, this means the base rate of 4.1% is well above the 2.5% interest stress test under which they gained their loan.

So what does this mean to your personally and/or your business?

One number I have heard is that there are 110,000 households in Melbourne suffering mortgage stress.  And that is no surprise when you consider that the repayments on a $750,000 loan have already increased by $1,300 per month.  And if they increase by another 1%, then those repayments will increase by a further $480 per month.  It s scary to contemplate what that current number of 110,000 will grow to.

You can find out more and be given actions you can implement in our webinar tonight at 5:30.  We will also explore 4 other key areas to plan and protect against in 2023.

You can book your place at https://tinyurl.com/bdvxtvmn

5 key actions in 2023

There are always challenges but we seem to currently have our fair share.  We currently see 5 key actions required to navigate 2023.

The question is what are you going to do about them?  Are you going to let them control you?  Or are you going to protect yourself from them to ensure your business or yourself personally doesn’t suffer?

We see 5 risk areas to navigate in 2023:-

  1. Cyber crime & computer safety.
  2. Inflation.
  3. Interest rates (and cash flow).
  4. Technology.
  5. Protect personal wealth that is otherwise exposed.

The degree to which these 5 risks affect you may be different to others and may be one or two don’t affect you.  But doing nothing is rarely the best option.  We therefore encourage you to attend our upcoming webinar on Tuesday 31st January at 5:30 during which we explore these risks – and more importantly, the 5 keys actions you can implement in face of them.

You can reserve your place by clicking here.

And as we are passionate about helping small businesses, we welcome your extending this invitation to family, friends and business colleagues.

 

SG deadline reminder

I trust you had an enjoyable festive season – and back into it we go!  So here is a quick SG deadline reminder.

Friday 27th January is the end date for satisfying your Super Guarantee (SG) super obligations for the December 2022 quarter.

Please make sure you do not confuse this obligation with the December quarter BAS.  The December quarter BAS automatically has a one month extension to 28th February to all.  There are no extensions for reporting and payment of SG super.

Please note that super clearing houses take up to 8 days to pass the money through to the super fund.  It therefore means that processing and payment to the clearing should be made as soon as possible.

And please make sure you have been calculating super at 10.5% since it increased on 1st July 2022.

SG super should never be paid late as late payments attract substantial interest and penalties.  Furthermore, SG (and BAS) liabilities that remain unreported and unpaid after 3 months automatically become personal debts of directors.

We also take this opportunity to remind you of the imminent migration to Single Touch Payroll 2 with its extra reporting requirements.  Please do not hesitate if you would like an introduction to a payroll specialist.

We welcome any questions you might have.

 

Important Director Identification Number (DIN) update

This has no doubt been caused by their phone systems being in meltdown.  But finally we have some logical relief in having to apply for a Director Identification Number (DIN).

A DIN is required for all directors including those of trustee companies and trustees of self managed super funds.

A director is issued with a unique number irrespective of how many directorships are held.

Thankfully we finally have some common sense relief.

Those that were a director before November 2022 need not apply for a DIN if:-

  • The sole or all companies of which one is a director are liquidated before 1st
  • The sole or all companies of which one is a director are deregistered before 1st
  • A deceased director (you would think this exemption would have bene in place for the start particularly given one of the stated aims of this system is to eliminate phoenix activity).
  • Directors who have ceased due to losing capacity.
  • Director who resign all directorships before 1st December.  Please note though that it appears there is a carve out for this for those who try and re-appoint themselves after 30th November.

If you haven’t applied as yet for your DIN, please do so immediately.

The fine for not doing so is $13,200 and it will be recorded as a criminal offence.  It remains to be seen what relief may be given – but don’t rely on that.

Need to no more?  Then either call us or check this earlier blog (and related articles).

How you can make sure that your super doesn’t go to the wrong people

How you can make sure that your super doesn’t go to the wrong people?  It’s a question anyone with super should ask themselves.  Even if your balance is low, a life insurance payment can create a whole new scenario.

Peoples biggest 2 assets are almost always their family home and their super.

Your Will dictates who is to get our home if it is owned entirely in your own name.

If it is owned jointly with your partner, then they will get your half should you pre-decease them; in other words it doesn’t form part of your estate.

Your super though is held in trust for you.

If your super is with a public fund (industry, retail, employer and so on) then it is up to their board trustees to decide who is to receive your super in the absence of a complying death benefit nomination.  The trick is to have the right form of nomination in place.

When it comes to self managed super funds, it can become of whole lot trickier.  Not only do you need the right form of death benefit nomination in place, but you must be wary of the trust deed.  As they are generic in nature, they don’t reflect your wants or desires.  Moreover, they can confer general powers which are open to be used in inappropriate ways depending on how the cards fall.

In an upcoming 30 minute webinar we will explore:-

  • The various advantages and disadvantages of the 3 types of death benefit nominations.
  • Where your super can best be directed to be paid and associated tax benefits.
  • Recent court cases where a typical super fund trust deed left the door open for the wrong person to claim the super (with legal fees often into the hundreds of thousands).
  • Our new solution.

The webinar will be held from 5:30pm on Wednesday 30th November.  You can register by clicking on the following link – https://us02web.zoom.us/webinar/register/WN_Ov2inp73QdG955M_Bhk9Jg

And as we are passionate about helping people to become more successful and secure, we welcome your extending this invitation to family, friends and business colleagues.

 

Does your firm comply with Privacy Laws?

Does your firm comply with Privacy Laws?  The recent Optus and Medibank privacy hacks have been alarming.  They are also a clarion call to assess how your firm collects, holds and protects data.

And clearly what will happen next is that both laws and expectations will tighten.  And tighten they will as our privacy and security requirements lag major countries and in particular Europe.

 

So what must you do?

Firms with group turnover in excess of $3,000,000 must comply and adhere to the 13 principles as set out the Privacy Act.

You can read more about those principles here

But those that handle Tax File Numbers (like tax agents) or medical records must adhere to these principles no matter what their turnover is.  Credit reporting firms are also automatically covered by the Privacy Act.

 

So what does this mean you need to do

Not by all means a complete list, some of the key activities you should undertake are:-

  • Consider what data you actually need.
  • Consider how your team should best ask and collect personal data.
  • Consider what data you hold is sensitive.
  • Consider how long you should keep that data.
  • Consider how you are going to keep that data – such for how long, is it going to be encrypted, who has access to it.
  • Consider where you store data.
  • Undertake regular cyber training.
  • Adequately train team members on all requirements.
  • Review regularly!
  • And take out cyber protection insurance – we say this last as prevention is better than cure.

Please ask us if you would like a referral to a suitably qualified technical expert or cyber insurer.

Urgent ASIC DIN requirement

This is an urgent reminder to those directors who have yet to apply for their ASIC  Directors Identification Number (DIN).

You now only have 3 weeks left in which to apply and receive your DIN.

Not obtaining one by the due date is a criminal offence and subject to a fine of $13,320.

It is also a civil offence which attracts a fine of $1,100,000.

We have progressively been publicising this obligation in our newsletters and remind you of our blogs which you can read at:-

19th October 2021 – click here re what is a DIN and your obligations.

8th February 2022 – click here for update on DIN requirements.

3rd April 2022 – click here for DIN obligations for first time directors.

At this stage it now appears too late to request a paper form and have it processed in time.

Online is the best way of applying.  You can do so by clicking here.

However, if you have differences in your name as registered with different government authorities, it is best to ring 13 62 50 (and do so in the morning).

Please call us if you have any question – but above all else don’t leave this any longer – apply today!

Are you complying with your new landlord obligations?

Are you complying with your new landlord obligations?

There has been a lot of covid noise over the last 2 years so perhaps you might have missed this new obligation.

A landlord musty ensure a residential property meets basic minimum standards for leases entered into from 29th March 2021.  It also applies to fixed term agreements that rolled over into periodical agreements after that date (that is leases that become monthly upon the end of the lease term).

There are 13 minimum standards (with a 14th of electrical safety from 2023):-

  1. Door locks
  2. Bins
  3. Toilets
  4. Bathrooms
  5. Kitchens
  6. Laundry
  7. Structural soundness
  8. Mould and dampness
  9. Window coverings
  10. Windows
  11. Lighting
  12. Ventilation
  13. Heating

It is your obligation as a landlord to ensure that these standards are met.

It has come to our attention that some agents are trying to circumvent this by just having the landlord sign something.

I would hate to think where such landlords would sit if something went wrong.

A proper way to attend you is to have your property inspected by a building inspector that way you fulfill your needs.  You also have the added benefit of knowing your investment is in good condition or need of repair before it becomes more costly.  How would you know or even know to identify if there was early termite infestation under the sub floor?

We have had dealings with a number of building inspectors across Melbourne and would be happy to give you an introduction.

You can also read more about landlord obligations at www.consumer.vic.gov.au/housing/renting

Are your PAYG or GST Instalments too high?

Quarterly BAS’s for the June 2022 quarter that contain GST or PAYG Instalments are due for lodgement this Thursday.

If your instalments for the year including June’s is close to the year’s actual liability then no action is required.

If either instalment is less then you will be asked to pay the shortfall by the time the 2022 Tax Return is lodged.  You can though increase your June quarter instalment if you wish to not be sitting on the cash until May next year.  This may also suit you if you are worried about not having the required funds when the shortfall(s) falls due.

But what if either instalment for June will take you well over what you are required to pay for the year?

If you do pay it, then it is not the end of the world as any excess amount will be refunded to you when the 2022 Tax Return is lodged.  But why drain your funds in the meantime?

You are entitled to amend the instalment as issued by the ATO.  But don’t get too carried away as the ATO does have the power to fine for gross under-estimates.

Do you think your instalments are too high?  This is just one of the 67 items we address when undertaking pre year end reviews.  So, if you are a client of ours then take comfort that we have already addressed this.  If you are not a client, then we welcome a discussion.

I take the opportunity to state that the ATO has resumed normal operations.  Since covid broke, they have not been chasing debts and lodgements.  That has all changed as evidenced by the volume of letters and demands issued by the ATO since June.  We have even heard of the ATO issuing Director Penalty Notices (DPN’s) to directors.  DPN’s can be issued where a BAS obligation remains unreported and unpaid for more then 3 months.  The scary part is that once issued, basically speaking, the only way to clear your now personal tax debt is to pay the tax due.  Please don’t hesitate to call us if you are concerned about any request by the ATO.